AN ACT
to promote consumer choice in video service providers and to establish uniform
taxes for video programming services.

The General Assembly of North Carolina enacts:

SECTION 1. Chapter 66 of the General
Statutes is amended by adding a new Article to read:

"Article 42.

"State Franchise for Cable Television Service.

"§ 66-350.
Definitions.

The following definitions apply in this Article:

(1)Cable
service. - Defined in G.S. 105-164.3.

(2)Cable
system. - Defined in 47 U.S.C. § 522.

(3)Channel. - A
portion of the electromagnetic frequency spectrum that is used in a cable
system and is capable of delivering a television channel.

(4)Existing
agreement. - A local franchise agreement that was awarded under G.S. 153A-137
or G.S. 160A-319 and meets either of the following:

a.Is
in effect on January 1, 2007.

b.Expired
before January 1, 2007, and the cable service provider under the agreement
provides cable service to subscribers in the franchise area on January 1, 2007.

(5)Pass a
household. - Make service available to a household, regardless of whether the
household subscribes to the service.

(6)PEG channel.
- A public, educational, or governmental access channel provided to a county or
city.

(7)Secretary. -
The Secretary of State.

(8)Video
programming. - Defined in G.S. 105-164.3.

"§ 66-351.
State franchising authority.

(a)Authority. -
The Secretary of State is designated the exclusive franchising authority in
this State for cable service provided over a cable system. This designation
replaces the authorization to counties and cities in former G.S. 153A-137
and G.S. 160A-319 to award a franchise for cable service. This designation
is effective January 1, 2007. After this date, a county or city may not award
or renew a franchise for cable service.

(b)Award and
Scope. - The Secretary is considered to have awarded a franchise to a person
who files a notice of franchise under G.S. 66-352. A franchise for cable
service authorizes the holder of the franchise to construct and operate a cable
system over public rights-of-way within the area to be served. Chapter 160A of
the General Statutes governs the regulation of public rights-of-way by a city.

"§ 66-352.
Award of franchise and commencement of service.

(a)Notice of
Franchise. - A person who intends to provide cable service over a cable system
in an area must file a notice of franchise with the Secretary before providing
the service. A person who files a notice of franchise must pay a fee in the
amount set in G.S. 57C-1-22 for filing articles of organization.

A notice of franchise is effective when it is filed with
the Secretary. The notice of franchise must include all of the following:

(3)A list of
each county and city in which the described service area is located, in whole
or in part.

(4)A schedule
indicating when service is expected to be offered in the service area.

(b)Commencement
of Service. - A person who files a notice of franchise under subsection (a) of
this section must begin providing cable service in the service area described
in the notice within 120 days after the notice is filed. If cable service does
not begin within this period, the notice of franchise terminates 130 days after
it was filed. If cable service begins within this period, the holder of the
State-issued franchise must file a notice of service with the Secretary within
10 days after the cable service begins. Cable service begins when it passes one
or more households in the described service area. This subsection does not
apply to a cable service provider who terminates an existing agreement whose
franchise area includes all of the service area described in a notice of
franchise filed by the provider under subsection (a) of this section.

A notice of service for a service area must include all of
the following:

(1)The
effective date of a notice of franchise for that area.

(2)A description
and map of the service area.

(3)A statement
that cable service has begun in the service area.

(c)Extension. -
A person who intends to provide cable service over a cable system in an area
that is contiguous with but outside the service area described in a notice of
franchise on file with the Secretary must file a notice of franchise under
subsection (a) of this section that includes the proposed area. The initial
service requirements in subsection (b) of this section apply to the proposed area.
If the map of the area to be served includes any area that is part of the
service area of another State-issued franchise, the termination of a notice of
franchise for the proposed area for failure to begin service within the
required time does not affect the status of the other State-issued franchise.

(d)Withdrawal.
- A person may withdraw a notice of franchise by filing a notice of withdrawal
with the Secretary. The notice of withdrawal must be filed at least 90 days
before the service is withdrawn.

"§ 66-353.
Annual service report.

A holder of a State-issued franchise must file an annual
service report with the Secretary. The report must be filed on or before July
31 of each year. The report must be accompanied by a fee in the amount set in G.S. 57C-1-22
for filing an annual report. The report must include all of the following:

(1)The
effective date of a notice of franchise for that area.

(2)A
description and map of the service area.

(3)The
approximate number of households in the service area.

(4)A
description and a map of the households passed in the service area as of July
1.

(5)The
percentage of households passed in the service area as of July 1.

(6)The
percentage of households passed in the service area as of July 1 of any
preceding year for which a report was required under this section.

(7)A report
indicating the extent to which the holder has met the customer service
requirements under G.S. 66-356(b).

(8)A schedule
indicating when service is expected to be offered in the service area, to the
extent the schedule differs from one included in the notice of franchise or in
a report previously submitted under this section, and an explanation of the
reason for the new schedule.

"§ 66-354.
General filing and report requirements.

(a)General. -
A document filed with the Secretary under this Article must be signed by an
officer or general partner of the person submitting the document. Within five
days after a person files a document with the Secretary under this Article, the
person must send a copy of the document to any county or city included in the
service area described in the document and to the registered agent of any cable
service provider that is providing cable service under an existing agreement in
the service area described in the document.

The provisions of Article 2 of Chapter 55D of the General
Statutes apply to the submission of a document under this Article. A document
filed under this Article is a public record as defined in G.S. 132-1. The
Secretary must post a document filed under this Article on its Internet Web
site or indicate on its Internet Web site that the document has been filed and
is available for inspection.

A successor in interest to a person who has filed a notice
of franchise is not required to file another notice of franchise. When a change
in ownership occurs, the owner must file a notice of change in ownership with
the Secretary within 14 days after the change becomes effective.

(b)Forfeiture.
- A person who offers cable service over a cable system without filing a notice
of franchise or a notice of service as required by this Article is subject to
forfeiture of the revenue received during the period of noncompliance from
subscribers to the cable service in the area of noncompliance. Forfeiture does
not apply to revenue received from cable service provided over a cable system
in an area that is adjacent to a service area described in a notice of
franchise and notice of service filed by that cable service provider under
G.S. 66-352 if the provider obtains a State-issued franchise and files a
notice of service that includes this area within 20 days after a civil action
for forfeiture is filed. A forfeiture does not affect the liability of the
cable service provider for sales tax due under G.S. 105-164.4 on cable
service.

A cable service provider whose area includes the area in
which a person is providing cable service without complying with the notice of
franchise and notice of service requirements may bring a civil action for
forfeiture. The amount required to be forfeited in the action must be remitted
to the Civil Penalty and Forfeiture Fund established in G.S. 115C-457.2.

"§ 66-355.
Effect on existing local franchise agreement.

(a)Existing
Agreement. - This Article does not affect an existing agreement except as
follows:

(1)Effective
January 1, 2007, gross revenue used to calculate the payment of the franchise
tax imposed by G.S. 153A-154 or G.S. 160A-214 does not include gross
receipts from cable service subject to sales tax under G.S. 105-164.4.
This exclusion does not otherwise affect the calculation of gross revenue and
the payment to counties and cities of franchise tax revenue under existing
agreements that have not been terminated under subsection (b) of this section.

(2)A cable
service provider under an existing agreement that is in effect on January 1,
2007, may terminate the agreement in accordance with subsection (b) of this
section in any of the following circumstances:

a.A
notice of service filed under G.S. 66-352 indicates that one or more
households in the franchise area of the existing agreement are passed by both
the cable service provider under the existing agreement and the holder of a
State-issued franchise.

b.As
of January 1, 2007, a county or city has an existing agreement with more than
one cable service provider for substantially the same franchise area and at
least twenty-five percent (25%) of the households in the franchise areas of the
existing agreements are passed by more than one cable service provider.

c.A
person provides wireline competition in the franchise area of the existing
agreement by offering video programming over wireline facilities to single
family households by a method that does not require a franchise under this
Article. A notice of termination filed on the basis of wireline competition
must include evidence of the competition in providing video programming
service, such as an advertisement announcing the availability of the service,
the acceptance of an order for the service, and information on the provider's
Web site about the availability of the service. A county or city is allowed 60
days to review the evidence. The effective date of the termination is tolled
during this review period. At the end of this period, the termination proceeds
unless the county or city has obtained an order enjoining the termination based
on the cable service provider's failure to establish the existence of wireline
competition in its franchise area.

(3)A cable
service provider under an existing agreement that expired before January 1,
2007, may obtain a State-issued franchise. The provider does not have to
terminate the agreement in accordance with subsection (b) of this section
because the agreement has expired.

(b)Termination.
- To terminate an existing agreement, a cable service provider must file a
notice of termination with the affected county or city and file a notice of
franchise with the Secretary. A termination of an existing agreement becomes
effective at the end of the month in which the notice of termination is filed
with the affected county or city. A termination of an existing agreement ends
the obligations under the agreement and under any local cable regulatory
ordinance that specifically authorizes the agreement as of the effective date
of the termination but does not affect the rights or liabilities of the county
or city, a taxpayer, or another person arising under the existing agreement or
local ordinance before the effective date of the termination.

"§ 66-356.
Service standards and requirements.

(a)Discrimination
Prohibited. - A person who provides cable service over a cable system may not
deny access to the service to any group of potential residential subscribers
within the filed service area because of the race or income of the residents. A
violation of this subsection is an unfair or deceptive act or practice under
G.S. 75-1.1.

In determining whether a cable service provider has
violated this subsection with respect to a group of potential residential
subscribers in a service area, the following factors must be considered:

(1)The length
of time since the provider filed the notice of service for the area. If less
than a year has elapsed since the notice of service was filed, it is
conclusively presumed that a violation has not occurred.

(2)The cost of
providing service to the affected group due to distance from facilities,
density, or other factors.

(3)Technological
impediments to providing service to the affected group.

(4)Inability to
obtain access to property required to provide service to the affected group.

(5)Competitive pressure
to respond to service offered by another cable service provider or other
provider of video programming.

(b)FCC
Standards. - A person who provides cable service over a cable system must
comply with the customer service requirements in 47 C.F.R. Part 76 and
emergency alert requirements established by the Federal Communications
Commission.

(c)Complaints.
- The Consumer Protection Division of the Attorney General's Office is
designated as the State agency to receive and respond to customer complaints
concerning cable services. Persistent or repeated violations of the federal
customer service requirements or the terms and conditions of the cable service
provider's agreement with customers are unfair or deceptive acts or practices
under G.S. 75-1.1.

To facilitate the resolution of customer complaints, the
cable service provider must include the following statement on the customer's
bill: "If you have a complaint about your cable service, you should first
contact customer service at the following telephone number: (insert the cable
service provider's customer service telephone number). If the cable service
provider does not satisfactorily resolve your complaint, contact the Consumer
Protection Division of the Attorney General's Office of the State of North
Carolina (insert information on how to contact the Consumer Protection Division
of the Attorney General's Office).

(d)No Build-Out.
- No build-out requirements apply to a person who provides cable service under
a State-issued franchise.

"§ 66-357.
Availability and use of PEG channels.

(a)Application.
- This section applies to a person who provides cable service under a State-issued
franchise. It does not apply to a person who provides cable service under an
existing agreement.

(b)Local
Request. - A county or city must make a written request to a cable service
provider for PEG channel capacity. The request must include a statement
describing the county's or city's plan to operate and program each channel
requested. The cable service provider must provide the requested PEG channel
capacity within the later of the following:

(1)120 days
after the cable service provider receives the written request.

(2)30 days
after any interconnection requested under G.S. 66-358(a)(1) is
accomplished.

(c)Initial PEG
Channels. - A city with a population of at least 50,000 is allowed a minimum of
three initial PEG channels plus any channels in excess of this minimum that are
activated, as of July 1, 2006, under the terms of an existing franchise
agreement whose franchise area includes the city. A city with a population of
less than 50,000 is allowed a minimum of two initial PEG channels plus any
channels in excess of this minimum that are activated, as of July 1, 2006, under
the terms of an existing franchise agreement whose franchise area includes the
city. For a city included in the franchise area of an existing agreement, the
agreement determines the service tier placement and transmission quality of the
initial PEG channels. For a city that is not included in the franchise area of
an existing agreement, the initial PEG channels must be on a basic service
tier, and the transmission quality of the channels must be equivalent to those
of the closest city covered by an existing agreement.

A county is allowed a minimum of two initial PEG channels
plus any channels in excess of this minimum that are activated, as of July 1,
2006, under the terms of an existing franchise agreement whose franchise area
includes the county. For a county included in the franchise area of an existing
agreement, the agreement determines the service tier placement and transmission
quality of the initial PEG channels. For a county that is not included in the
franchise area of an existing agreement, the initial PEG channels must be on a
basic service tier and the transmission quality of the channels must be
equivalent to those of any city with PEG channels in the county.

The cable service provider must maintain the same channel
designation for a PEG channel unless the service area of the State-issued
franchise includes PEG channels that are operated by different counties or
cities and those PEG channels have the same channel designation. Each county
and city whose PEG channels are served by the same cable system headend must
cooperate with each other and with the cable system provider in sharing the
capacity needed to provide the PEG channels.

(d)Additional
PEG Channels. - A county or city that does not have seven PEG channels,
including the initial PEG channels, is eligible for an additional PEG channel
if it meets the programming requirements in this subsection. A county or city
that has seven PEG channels is not eligible for an additional channel.

A county or city that meets the programming requirements
in this subsection may make a written request under subsection (b) of this
section for an additional channel. The additional channel may be provided on
any service tier. The transmission quality of the additional channel must be at
least equivalent to the transmission quality of the other channels provided.

The PEG channels operated by a county or city must meet
the following programming requirements for at least 120 continuous days in
order for the county or city to obtain an additional channel:

(1)All of the
PEG channels must have scheduled programming for at least eight hours a day.

(2)The
programming content of each of the PEG channels must not repeat more than
fifteen percent (15%) of the programming content on any of the other PEG
channels.

(3)No more than
fifteen percent (15%) of the programming content on any of the PEG channels may
be character-generated programming.

(e)Use of
Channels. - If a county or city no longer provides any programming for transmission
over a PEG channel it has activated, the channel may be reprogrammed at the
cable service provider's discretion. A cable service provider must give at
least a 60-day notice to a county or city before it reprograms a PEG channel
that is not used. The cable service provider must restore a previously lost PEG
channel within 120 days of the date a county or city certifies to the provider
a schedule that demonstrates the channel will be used.

(f)Operation
of Channels. - A cable service provider is responsible only for the
transmission of a PEG channel. The county or city to which the PEG channel is
provided is responsible for the operation and content of the channel. A county
or city that provides content to a cable service provider for transmission on a
PEG channel is considered to have authorized the provider to transmit the
content throughout the provider's service area, regardless of whether part of
the service area is outside the boundaries of the county or city.

All programming on a PEG channel must be noncommercial. A
cable service provider may not brand content on a PEG channel with its logo,
name, or other identifying marks. A cable service provider is not required to
transmit content on a PEG channel that is branded with the logo, name, or other
identifying marks of another cable service provider.

(g)Compliance.
- A county or city that has not received PEG channel capacity as required by
this section may bring an action to compel a cable service provider to comply
with this section.

"§ 66-358.
Transmission of PEG channels.

(a)Service. -
A cable service provider operating under a State-issued franchise must transmit
a PEG channel by one of the following methods:

(1)Interconnection
with another cable system operated in its service area. A cable service
provider operating in the same service area as a provider under a State-issued
franchise must interconnect its cable system on reasonable and competitively
neutral terms with the other provider's cable system within 120 days after it
receives a written request for interconnection and may not refuse to
interconnect on these terms. The terms include compensation for costs incurred
in interconnecting. Interconnection may be accomplished by direct cable,
microwave link, satellite, or another method of connection.

(2)Transmission
of the signal from each PEG channel programmer's origination site, if the
origination site is in the provider's service area.

(b)Signal. -
All PEG channel programming provided to a cable service provider for
transmission must meet the federal National Television System Committee
standards or the Advanced Television Systems Committee Standards. If a PEG
channel programmer complies with these standards and the cable service provider
cannot transmit the programming without altering the transmission signal, then
the cable service provider must do one of the following:

(1)Alter the
transmission signal to make it compatible with the technology or protocol the cable
service provider uses to deliver its cable service.

(2)Provide to
the county or city the equipment needed to alter the transmission signal to
make it compatible with the technology or protocol the cable service provider
uses to deliver its cable service.

"§ 66-359.
PEG channel grants.

(a)PEG Channel
Fund. - The PEG Channel Fund is created as an interest-bearing special revenue
fund. It consists of revenue allocated to it under G.S. 105-164.44I(b) and
any other revenues appropriated to it. The e-NC Authority, created under
G.S. 143B-437.46, administers the Fund.

(b)Grants. - A
county or city may apply to the e-NC Authority for a grant from the PEG Channel
Fund. In awarding grants from the Fund, the e-NC Authority must, to the extent
possible, select applicants from all parts of the State based upon need. Grants
from the Fund are subject to the following limitations:

(1)The grant
may not exceed twenty-five thousand dollars ($25,000).

(2)The
applicant must match the grant on a dollar-for-dollar basis.

(3)The grant
may be used only for capital expenditures necessary to provide PEG channel
programming.

(4)An applicant
may receive no more than one grant per fiscal year.

(c)Reports. -
The e-NC Authority must publish an annual report on grants awarded under this
section. The report must list each grant recipient, the amount of the grant,
and the purpose of the grant.

"§ 66-360.
Service to public building.

At the written request of a county or city, a cable
service provider operating under a State-issued franchise must provide cable
service without charge to a public building located within 125 feet of the
provider's cable system. The required service is the basic, or lowest-priced,
service the provider offers to customers. The terms and conditions that apply
to service provided to a residential retail customer apply to the service
provided to the public building. Only one service outlet is required for a
building. The cable service provider is not required to provide inside wiring
and is not required to provide service that conflicts with restrictions that
apply in a program licensing agreement or another contract. A public building
is a building used as a public school, a charter school, a county or city library,
or a function of the county or city."

SECTION 2. G.S. 105-164.3 is amended by
adding a new subdivision to read:

"§ 105-164.3.
Definitions.

The following definitions apply in this Article:

…

(50c)Video programming. - Programming
provided by, or generally considered comparable to programming provided by, a
television broadcast station, regardless of the method of delivery."

SECTION 3. G.S. 105-164.4(a)(6) reads
as rewritten:

"(6) The combined general
rate applies to the gross receipts derived from providing any of the
following broadcast services video programming to a subscriber in
this State. A cable service provider, a direct-to-home satellite service
provider, and any other person engaged in the business of providing any
of these services video programming is considered a retailer under
this Article:Article.

a.Direct-to-home
satellite service.

b.Cable
service."

SECTION 4. G.S. 105-164.4C(d) is
recodified as G.S. 105-164.4D with the catch line "Bundled
services."

SECTION 5. G.S. 105-164.4D, as
recodified by Section 4 of this act, reads as rewritten:

"§ 105-164.4D.
Bundled services.

Bundled Services. - When a taxable telecommunications
service is bundled with a service that is not taxable, the tax applies to
the gross receipts from the taxable service in the bundle as follows:

(1) If the service
provider offers all the services in the bundle on an unbundled basis, tax is
due on the unbundled price of the taxable service, less the discount resulting
from the bundling. The discount for a service as the result of bundling is the
proportionate price decrease of the service, determined on the basis of the
total unbundled price of all the services in the bundle compared to the bundled
price of the services.

(2) If the service
provider does not offer one or more of the services in the bundle on an
unbundled basis, tax is due on the taxable service based on a reasonable
allocation of revenue to that service. If the service provider maintains an
account for revenue from a taxable service, the service provider's allocation
of revenue to that service for the purpose of determining the tax due on the
service must reflect its accounting allocation of revenue to that
service."

"(a) Amount. - The
Secretary must distribute to the cities part of the taxes imposed by
G.S. 105-164.4(a)(4c) on telecommunications service. The Secretary must
make the distribution within 75 days after the end of each calendar quarter.
The amount the Secretary must distribute is eighteen and three one-hundredths
percent (18.03%) the following percentages of the net proceeds of
the taxes collected during the quarter, quarter:

(1)Eighteen and
three one-hundredths percent (18.03%), minus two million six hundred twenty
thousand nine hundred forty-eight dollars ($2,620,948).($2,620,948),
must be distributed to cities in accordance with this section.This The
deduction is one-fourth of the annual amount by which the distribution to
cities of the gross receipts franchise tax on telephone companies, imposed by
former G.S. 105-20, was required to be reduced beginning in fiscal year
1995-96 as a result of the "freeze deduction." The Secretary must
distribute the specified percentage of the proceeds, less the "freeze
deduction" among the cities in accordance with this section.

(2)Seven and
twenty-three one-hundredths percent (7.23%) must be distributed to counties and
cities as provided in G.S. 105-164.44I."

SECTION 8. Article 5 of Chapter 105 of the
General Statutes is amended by adding a new section to read:

"§ 105-164.44I.
Distribution of part of sales tax on video programming service and
telecommunications service to counties and cities.

(a)Distribution.
- The Secretary must distribute to the counties and cities part of the taxes
imposed by G.S. 105-164.4(a)(4c) on telecommunications service and
G.S. 105-164.4(a)(6) on video programming service. The Secretary must make
the distribution within 75 days after the end of each calendar quarter. The
amount the Secretary must distribute is the sum of the revenue listed in this
subsection. The Secretary must distribute two million dollars ($2,000,000) of
this amount in accordance with subsection (b) of this section and the remainder
in accordance with subsections (c) and (d) of this section. The revenue to be
distributed under this section consists of the following:

(1)The amount
specified in G.S. 105-164.44F(a)(2).

(2)Twenty-two
and sixty-one one-hundredths percent (22.61%) of the net proceeds of the taxes
collected during the quarter on video programming, other than on direct-to-home
satellite service.

(3)Thirty-seven
percent (37%) of the net proceeds of the taxes collected during the quarter on
direct-to-home satellite service.

(b)Supplemental
PEG Support. - The Secretary must include the applicable amount of supplemental
PEG channel support in each quarterly distribution to a county or city. The
amount to include is one-fourth of twenty-five thousand dollars ($25,000) for
each qualifying PEG channel operated by the county or city. The amount of money
distributed under this subsection may not exceed two million dollars
($2,000,000) in a fiscal year. If the amount to be distributed for qualifying
PEG channels in a fiscal year would otherwise exceed this maximum amount, the
Secretary must proportionately reduce the applicable amount distributable for
each PEG channel. If the amount to be distributed for qualifying PEG channels
in a fiscal year is less than two million dollars ($2,000,000), the Secretary
must credit the excess amount to the PEG Channel Fund established in
G.S. 66-359.

A county or city must certify to the Secretary by July 15
of each year the number of qualifying PEG channels it operates. A qualifying
PEG channel is one that meets the programming requirements under G.S. 66-357(d).
A county or city may not receive PEG channel support under this subsection for
more than three qualifying PEG channels.

The amount included under this subsection in a
distribution to a county or city is intended to supplement the PEG channel
support available in the amount distributed under this section. The money
distributed to a county or city under this subsection must be used by it for
the operation and support of PEG channels. For purposes of this subsection, the
term "PEG channel" has the same meaning as in G.S. 66-350.

(c)2006-2007
Fiscal Year Distribution. - The share of a county or city is its proportionate
share of the amount to be distributed to all counties and cities under this
subsection. The proportionate share of a county or city is the base amount for
the county or city compared to the base amount for all other counties and
cities. The base amount of a county or city that did not impose a cable
franchise tax under G.S. 153A-154 or G.S. 160A-214 before July 1,
2006, is two dollars ($2.00) times the most recent annual population estimate
for that county or city. The base amount of a county or city that imposed a
cable franchise tax under either G.S. 153A-154 or G.S. 160A-214
before July 1, 2006, is the amount of cable franchise tax and subscriber fee
revenue the county or city certifies to the Secretary that it imposed during
the first six months of the 2006-2007 fiscal year. A county or city must make
this certification by March 15, 2007. The certification must specify the amount
of revenue that is derived from the cable franchise tax and the amount that is
derived from the subscriber fee.

(d)Subsequent
Distributions. - For subsequent fiscal years, the Secretary must multiply the
amount of a county's or city's share under this section for the preceding
fiscal year by the percentage change in its population for that fiscal year and
add the result to the county's or city's share for the preceding fiscal year to
obtain the county's or city's adjusted amount. Each county's or city's
proportionate share for that year is its adjusted amount compared to the sum of
the adjusted amounts for all counties and cities.

(e)Use of
Proceeds. - A county or city that imposed subscriber fees during the first six
months of the 2006-2007 fiscal year must use a portion of the funds distributed
to it under subsections (c) and (d) of this section for the operation and
support of PEG channels. The amount of funds that must be used for PEG channel
operation and support is two times the amount of subscriber fee revenue the
county or city certified to the Secretary that it imposed during the first six
months of the 2006-2007 fiscal year. A county or city that used part of its
franchise tax revenue in fiscal year 2005-2006 for the operation and support of
PEG channels or a publicly owned and operated television station must use the
funds distributed to it under subsections (c) and (d) of this section to
continue the same level of support for the PEG channels and public stations.
The remainder of the distribution may be used for any public purpose.

(f)Late
Information. - A county or city that does not submit information that the
Secretary needs to make a distribution by the date the information is due is
excluded from the distribution. If the county or city later submits the
required information, the Secretary must include the county or city in the
distribution for the quarter that begins after the date the information is
received.

(g)Population
Determination. - In making population determinations under this section, the
Secretary must use the most recent annual population estimates certified to the
Secretary by the State Budget Officer. For purposes of the distributions made
under this section, the population of a county is the population of its
unincorporated areas plus the population of an ineligible city in the county,
as determined under this section.

(h)City
Changes. - The following changes apply when a city alters its corporate
structure or incorporates:

(1)If a city
dissolves and is no longer incorporated, the proportional shares of the
remaining counties and cities must be recalculated to adjust for the
dissolution of that city.

(2)If two or
more cities merge or otherwise consolidate, their proportional shares are
combined.

(3)If a city
divides into two or more cities, the proportional share of the city that
divides is allocated among the new cities on a per capita basis.

(4)If a city
incorporates after January 1, 2007, and the incorporation is not addressed by
subdivisions (2) or (3) of this subsection, the share of the county in which
the new city is located is allocated between the county and the new city on a
per capita basis.

(i)Ineligible
Cities. - An ineligible city is disregarded for all purposes under this
section. A city incorporated on or after January 1, 2000, is not eligible for a
distribution under this section unless it meets both of the following
requirements:

(1)It is
eligible to receive funds under G.S. 136-41.2.

(2)A majority
of the mileage of its streets is open to the public.

(j)Nature.
- The General Assembly finds that the revenue distributed under this section is
local revenue, not a State expenditure, for the purpose of Section 5(3) of
Article III of the North Carolina Constitution. Therefore, the Governor may not
reduce or withhold the distribution."

SECTION 9. G.S. 105-164.21B is
repealed.

SECTION 10. G.S. 153A-137 is repealed.

SECTION 11.
G.S. 153A-154 is repealed.

SECTION 12. G.S. 160A-211 reads as
rewritten:

"§ 160A-211.
Privilege license taxes.

(a) Authority. - Except
as otherwise provided by law, a city shall have power to levy privilege license
taxes on all trades, occupations, professions, businesses, and franchises
carried on within the city. A city may levy privilege license taxes on the
businesses that were formerly taxed by the State under the following sections
of Article 2 of Chapter 105 of the General Statutes only to the extent the
sections authorized cities to tax the businesses before the sections were
repealed:

(b) Barbershop and Salon
Restriction. - A privilege license tax levied by a city on a barbershop or a
beauty salon may not exceed two dollars and fifty cents ($2.50) for each
barber, manicurist, cosmetologist, beautician, or other operator employed in
the barbershop or beauty salon.

(c) Piped Gas
Restriction. Prohibition. - A city may not levy a privilege
license tax on a person who is engaged in the business of supplying piped
natural gas and is subject to tax under Article 5E of Chapter 105 of the
General Statutes.impose a license, franchise, or privilege tax on a
person engaged in any of the businesses listed in this subsection. These
businesses are subject to a State tax for which the city receives a share of
the tax revenue.

(1)Supplying
piped natural gas taxed under Article 5E of Chapter 105 of the General
Statutes.

(d)Telecommunications
Restriction. - A city may not impose a license, franchise, or privilege tax on
a company taxed under G.S. 105-164.4(a)(4c)."

SECTION 13. G.S. 160A-214 is repealed.

SECTION 14. G.S. 160A-296(a) reads as
rewritten:

"(a) A city shall have general
authority and control over all public streets, sidewalks, alleys, bridges, and
other ways of public passage within its corporate limits except to the extent
that authority and control over certain streets and bridges is vested in the
Board of Transportation. General authority and control includes but is not
limited to:to all of the following:

(1) The duty to keep the
public streets, sidewalks, alleys, and bridges in proper repair;repair.

(2) The duty to keep the
public streets, sidewalks, alleys, and bridges open for travel and free from
unnecessary obstructions;obstructions.

(3) The power to open new
streets and alleys, and to widen, extend, pave, clean, and otherwise improve
existing streets, sidewalks, alleys, and bridges, and to acquire the necessary
land therefor by dedication and acceptance, purchase, or eminent domain;domain.

(4) The power to close any
street or alley either permanently or temporarily;temporarily.

(5) The power to regulate
the use of the public streets, sidewalks, alleys, and bridges;bridges.

(6) The power to regulate,
license, and prohibit digging in the streets, sidewalks, or alleys, or placing
therein or thereon any pipes, poles, wires, fixtures, or appliances of any kind
either on, above, or below the surface:surface. To the extent a
municipality is authorized under applicable law to impose a fee or charge with
respect to activities conducted in its rights-of-way, the fee or charge must
apply uniformly and on a competitively neutral and nondiscriminatory basis to
all comparable activities by similarly situated users of the rights-of-way.

(7) The power to provide
for lighting the streets, alleys, and bridges of the city; andcity.

(8) The power to grant
easements in street rights-of-way as permitted by G.S. 160A-273."

SECTION 15. G.S. 160A-319(a) reads as
rewritten:

"(a) A city shall have
authority to grant upon reasonable terms franchises for the operation within
the city of a telephone system and any of the enterprises listed in G.S. 160A-311
and for the operation of telephone systems. G.S. 160A-311, except a
cable television system. A franchise granted by a city authorizes the operation
of the franchised activity within the city. No franchise shall be granted
for a period of more than 60 years, except that a franchise for solid waste
collection or disposal systems and facilities shall not be granted for a period
of more than 30 years and cable television franchises shall not be granted
for a period of more than 20 years. Except as otherwise provided by law,
when a city operates an enterprise, or upon granting a franchise, a city may by
ordinance make it unlawful to operate an enterprise without a franchise."

SECTION 16. To make the distribution
required under G.S. 105-164.44I(b), as enacted by this act, for the 2006-2007
fiscal year, a county or city must certify to the Secretary of Revenue by March
15, 2007, the number of qualifying PEG channels it operates.

SECTION 17. A primary purpose of this act is
to promote consumer choice in video service providers. A premise of this
goal is that increased competition will lead to improved service. Under
competition, a customer who is dissatisfied with service by one cable service
provider will have the option of choosing a different service provider.

G.S. 66-356, as enacted by this act, designates the
Consumer Protection Division of the Attorney General's Office as the agency to
receive and respond to unresolved customer complaints about cable service
provided by the holder of a State-issued franchise. The transition from local
franchise agreements to State-issued franchises will occur gradually.

Due to the expected improvement in customer service and the
gradual change to State-issued franchises, the impact of the requirement in new
G.S. 66-356 on the staffing needs of the Consumer Protection Division is
not clear. The Office of the Attorney General is therefore requested to monitor
the number and type of cable service complaints it receives from customers in
areas served under a local franchise agreement and from areas served under a
State-issued franchise to determine whether the Consumer Protection Division
needs additional staff to fulfill the duty imposed by new G.S. 66-356 and
to make a report concerning staffing to the Fiscal Research Division of the
North Carolina General Assembly by April 1, 2007.

SECTION 18. The Consumer Protection Division
of the Attorney General's Office must report to the Revenue Laws Study
Committee on or before April 1 of each year, beginning April 1, 2008, on the
following information concerning cable service complaints the Division has
received from cable customers under G.S. 66-356:

(1) The number of customer
complaints.

(2) The types of customer
complaints.

(3) The different means of
resolving customer complaints.

SECTION 19. The Secretary of State has no
authority to determine whether a person who is providing video programming is
providing cable service over a cable system. An award of a State-issued
franchise under Article 42 of Chapter 66 of the General Statutes, as enacted by
this act, does not affect a determination of whether video programming provided
by the holder of the franchise is considered cable service provided over a
cable system under federal law or under a state law that applies substantially
the same definitions of "cable service" and "cable system"
as federal law. A person who provides video programming may obtain a State-issued
franchise under Article 42 of Chapter 66 of the General Statutes, as enacted by
this act, and thereby become subject to that Article, regardless of whether the
video programming the person provides is considered cable service provided
under a cable system under that Article or under federal law.

SECTION 20. If any provision of this act or
its application is held invalid, the invalidity does not affect other
provisions or applications of this act that can be given effect without the
invalid provisions or application, and to this end the provisions of this act
are severable.

SECTION 21. The Revenue Laws Study Committee
must review the effect Article 42 of Chapter 66 of the General Statutes, as
enacted by this act, has on the issues listed in this section to determine if
any changes to the law are needed:

(1) Competition in video
programming services.

(2) The number of cable
service subscribers, the price of cable service by service tier, and the
technology used to deliver the service.

(3) The deployment of
broadband in the State.

The Committee must review the impact of this Article on these
issues every two years and report its findings to the North Carolina General
Assembly. The Committee must make its first report to the 2008 Session of the
North Carolina General Assembly.

SECTION 22. This
act becomes effective January 1, 2007. Sections 7 and 8 of this act apply to
the distribution made within 75 days after March 31, 2007, for the quarter
starting January 1, 2007.

In the General Assembly read
three times and ratified this the 12th day of July, 2006.

_____________________________________

Beverly E. Perdue

President of the Senate

_____________________________________

James B. Black

Speaker of the House of Representatives

_____________________________________

Michael F. Easley

Governor

Approved __________.m. this
______________ day of ___________________, 2006